Lombard vs margin vs stock loan.

A Lombard loan, a margin loan, and a stock loan all involve securities and credit, but they are different instruments. A Lombard loan is a bespoke, pledged term facility with a negotiated loan-to-value and recourse profile. A margin loan is a standardised, open-ended brokerage line, full-recourse and continuously margined. "Stock loan" is the slippery one: to a shareholder it means a share-backed loan; to an institution it means lending shares out to a short-seller.

Three terms, three instruments

The confusion is understandable. All three arrangements sit at the intersection of securities and credit, and in casual use the names are swapped freely. But the differences are not cosmetic: they change who bears the risk, how the facility behaves when markets move, how long it lasts, and which rulebook governs it. Getting the term right is the first step to choosing the right instrument.

What a Lombard loan is

A Lombard loan is a loan secured by a pledge of listed shares or a diversified securities portfolio. It is arranged bilaterally and negotiated: the loan-to-value is calibrated to the specific holdings, the recourse profile is chosen (non-recourse, limited-recourse, or full-recourse), and the facility runs for an agreed term, typically renewable. The borrower keeps ownership of the pledged assets, along with the dividends and voting rights, subject to how the facility is structured. Because it is bespoke, a Lombard loan can accommodate concentrated positions and cross-border collateral that a standardised product will not. This is the same instrument as securities-backed lending.

What a margin loan is

A margin loan is credit extended by a broker against the securities held in a trading account. It is standardised rather than negotiated, open-ended rather than term, and full-recourse: the borrower stands behind it in full. Its defining feature is continuous margining — the account is marked against the broker's maintenance requirements, and if the collateral falls below them, the broker can issue a margin call or liquidate positions, often at short notice and at its discretion. Margin loans are convenient for active traders, but that convenience comes with standardised terms and a margining regime the borrower does not control.

What a "stock loan" is — two meanings

"Stock loan" is the term to watch, because it points to two different transactions. To a shareholder seeking liquidity, a stock loan usually means a share-backed loan: cash raised against pledged shares, the same economic idea as a Lombard loan. In institutional markets, however, "stock loan" — more precisely securities lending or stock lending — means lending shares out to another party, frequently to cover a short position, in exchange for a fee and collateral. In the first sense you are the borrower of cash; in the second you are the lender of stock. The two could hardly be more different, so it is always worth confirming which is meant before going further.

The three, side by side

The table below sets out the differences across the dimensions that matter. For "stock loan" it takes the share-backed sense — the one a shareholder is most likely to mean when comparing it with a Lombard or margin loan.

Which one fits

Choose a Lombard loan when the priority is a term facility, a negotiated loan-to-value, and control over the recourse and margining terms — especially for a concentrated or cross-border position. A margin loan suits an active trader who wants a standing, flexible line inside a brokerage account and is comfortable with continuous margining and full recourse. And if someone offers you a "stock loan", establish first whether they mean lending you cash against your shares or asking to borrow your shares. For a wider view of the alternatives, see liquidity options compared.